CVS Caremark (CVS) was widely criticized in March when word got out that its employees would have to submit to yearly health screenings or pay $50 more a month for insurance. The pharmacy chain isn’t exceptional: The Kaiser Family Foundation reports nearly half of U.S. companies with more than 200 employees have wellness programs that measure workers’ weight, blood pressure, blood sugar, and cholesterol. That number is likely to grow next year, when rules take effect under the Affordable Care Act that give employers more tools to prod workers into healthier behavior. The law will let companies charge employees who don’t meet certain health targets 30 percent more for insurance premiums, up from 20 percent now.
Chronic conditions such as obesity and diabetes account for three-quarters of U.S. health costs; a lot of that money could be saved if Americans took better care of themselves. Giving incentives to quit smoking or lose weight, the reasoning goes, will help companies tame growing medical costs while making workers healthier. It’s not at all clear that it does either—and advocates for patients caution that the programs could be used to make sick people pay more, a practice Obamacare was supposed to prevent. “If it becomes a tool for shifting health-care costs … you might undermine the whole idea of workplace wellness,” says Alan Balch, vice president of the Preventive Health Partnership, an alliance of the American Cancer Society, the American Diabetes Association, and the American Heart Association.
The share of U.S. companies that reward workers who participate in wellness programs grew to 61 percent in 2012 from 36 percent in 2009, according to a survey by Towers Watson (TW) and the National Business Group on Health (NBGH). Market researcher IBISWorld reports that employers spend $2 billion annually on the programs. Often employees receive the incentives just for agreeing to a finger prick and blood pressure check, no matter how the tests turn out. Johnson & Johnson’s (JNJ) wellness program lowers premiums for workers who take screenings and follow up with counselors to improve their health. At consumer credit bureau Experian (EXPN:LN), workers can earn $690 in premium discounts and fitness subsidies for joining the company’s wellness program. But the Obamacare rules set to take effect next year would allow companies more power to tie the price employees pay for insurance to specific health goals. Workers in such programs would only receive money, or avoid an increase in their insurance costs, if, for example, they keep their cholesterol or weight at certain levels. Those who can’t—because of a disability, or because of a predisposition to high cholesterol or diabetes—must be given a “reasonable alternative” to earn the reward, such as attending a seminar on healthy eating. In a February NBGH survey of 83 U.S. employers, 41 percent favored tying incentives to test results.
The U.S. Equal Employment Opportunity Commission is now examining whether such programs could violate anti-discrimination laws. And California’s legislature is considering a bill that would bar linking financial rewards to a worker’s health status. While some studies suggest $3 or more in savings for every dollar spent on wellness programs, the gains may come from shifting costs to less healthy employees rather than changing behavior, a March analysis in Health Affairs concluded. Dangling premium reductions as an incentive doesn’t get people to shape up, the authors wrote: “Powerful personal, social, and financial incentives to be healthy, nonsmoking, and thin already exist.” A RAND Corp. study last year found there’s not enough evidence “to definitively assess the impact of workplace wellness on health outcomes and cost.”
The rise of wellness programs has been accompanied by a proliferation of medical tests. Public health guidelines recommend cholesterol screening for healthy adults once every five years and screening for diabetes only in people with high blood pressure, absent other symptoms. Wellness screenings typically test for both annually. “You have to identify and medicate tons and tons of people to prevent one or two from getting sick,” says Al Lewis, a former consultant to health plans and employers. Lewis once preached the benefits of wellness management but has became a vocal critic after the hoped-for savings didn’t materialize. Corporate human resources departments are “playing doctor,” he says.
Bruce Elliott, manager of compensation and benefits at the Society for Human Resource Management, a trade group representing HR professionals, says critics need to give wellness programs a few years to prove their effectiveness: “It’s an investment, and it’s an investment that does take some time.” Helping employees quit cigarettes or lose weight will translate to lower medical costs over three to five years, he says.
Yet even Elliott advises against using penalties to coerce workers to change behavior, and he concedes that businesses eager to put wellness programs in place aren’t always rigorous about measuring whether they get results. “The one thing that does worry me is the utter lack of metrics and, really, the utter lack of thought,” Elliott says. “We’re now more at a herd mentality.” Part of the problem is that there’s little agreement on what does work and how to measure success. A majority of companies don’t track their wellness programs’ return on investment, according to a 2011 survey by ADP (ADP), a payroll services company.
There are a few simple fixes that have been shown to improve health and save costs, says Jeffrey Harris, director of the Health Promotion Research Center at the University of Washington. Aiding smokers who show a desire to quit can quickly pay off. Workers who aren’t stepping out a couple times an hour for a cigarette are more productive. And offering free in-office flu vaccines translates into fewer sick days.
Beyond that, the advantages get murkier. Tom Emerick, former vice president for benefit design at Wal-Mart Stores (WMT), says when he started out in 1980 companies were just beginning to offer money to employees who quit smoking or lost weight. Many employers ultimately discarded the programs because they didn’t work. Now an independent benefits consultant, he’s writing a book with Lewis that’s critical of wellness programs. He advises clients to forget about health screenings. The best thing they can do for their employees’ health, he tells them, is to reduce their stress by making their work more rewarding and fulfilling. “If you’re in a job you hate,” he says, “you’re going to live a short, unhealthy life, period.”